Research

We examine whether sell-side equity analysts' relationships with inventors affect analysts' coverage decisions following inventors' job moves. We find that after an inventor relocates from an origin firm to a destination firm, analysts who covered the origin firm prior to the move are 45% more likely to co-migrate by initiating coverage of the destination firm than the unconditional mean probability of initiating coverage. Cross-sectional tests show that co-migration is stronger when analysts exhibit greater incentives and have more opportunities to form and maintain relationships with inventors, proxied by conference-call engagement, prior employment overlaps, and geographic proximity. The pattern is also stronger when innovation-related information is more valuable to the analyst, both when the moving inventors are positioned to carry more valuable proprietary knowledge and when the destination firm's environment places greater weight on innovation-related information. Finally, compared to other analysts covering the same destination firm, co-migrating analysts issue more accurate earnings forecasts, generate stronger market reactions to their forecasts and recommendations, and are more likely to issue long-term forecasts. Overall, our findings highlight analyst-inventor relationships as portable informational capital that shapes analysts' coverage decisions and capital-market information production.